US6915274B2 - Reverse logistics method for recapturing value of used goods over internet exchange portals - Google Patents
Reverse logistics method for recapturing value of used goods over internet exchange portals Download PDFInfo
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- US6915274B2 US6915274B2 US09/809,543 US80954301A US6915274B2 US 6915274 B2 US6915274 B2 US 6915274B2 US 80954301 A US80954301 A US 80954301A US 6915274 B2 US6915274 B2 US 6915274B2
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- G06Q—INFORMATION AND COMMUNICATION TECHNOLOGY [ICT] SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES; SYSTEMS OR METHODS SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES, NOT OTHERWISE PROVIDED FOR
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- G06Q30/02—Marketing; Price estimation or determination; Fundraising
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- G—PHYSICS
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- G06Q—INFORMATION AND COMMUNICATION TECHNOLOGY [ICT] SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES; SYSTEMS OR METHODS SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES, NOT OTHERWISE PROVIDED FOR
- G06Q30/00—Commerce
- G06Q30/06—Buying, selling or leasing transactions
- G06Q30/0601—Electronic shopping [e-shopping]
- G06Q30/0613—Third-party assisted
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- G—PHYSICS
- G06—COMPUTING; CALCULATING OR COUNTING
- G06Q—INFORMATION AND COMMUNICATION TECHNOLOGY [ICT] SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES; SYSTEMS OR METHODS SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES, NOT OTHERWISE PROVIDED FOR
- G06Q30/00—Commerce
- G06Q30/06—Buying, selling or leasing transactions
- G06Q30/0601—Electronic shopping [e-shopping]
- G06Q30/0641—Shopping interfaces
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- G—PHYSICS
- G06—COMPUTING; CALCULATING OR COUNTING
- G06Q—INFORMATION AND COMMUNICATION TECHNOLOGY [ICT] SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES; SYSTEMS OR METHODS SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES, NOT OTHERWISE PROVIDED FOR
- G06Q40/00—Finance; Insurance; Tax strategies; Processing of corporate or income taxes
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Definitions
- the present invention relates generally to systems and methods for selling used goods through internet auction sites, and more particularly to a reverse logistics method for recapturing value of used goods over one or more internet exchange portals.
- FIG. 1 is a pictorial diagram of a traditional model 100 for a “vertical distribution supply chain” of capital asset flow used in the 1980s and early 1990's.
- Traditional high technology computer manufacturers 102 sold capital equipment to strategic-account customers 104 through a series of intermediaries, known as dealers and distributors 106 . After the equipment was no longer useful to a strategic-account customer, the equipment was either sold to a secondary dealer/distributor 108 at a substantial loss or left for scrap 110 resulting in a potentially large disposal cost.
- dealer/distributor mechanism involved warranty and service.
- High technology computer manufacturers felt that cost savings could be realized by having warranty and service handled by dealers/distributors who were in direct contact with the customer.
- dealer/distributor storefront operators provided manufactures greater visibility and brand recognition of their product to customers. Therefore dealer/distributor networks acted as agents for administering warranty and service for high technology computer manufacturers without building of internal service departments within high technology companies.
- computers, printers, and other electronic/mechanical devices are often comprised of parts. These parts are listed on a Bill of Materials, containing all the components making up a computer or electronic device.
- computer engineers and supply chain experts would often times try to use as many “common parts” between older generation hardware and new generation hardware. Therefore the “common parts” in a 1991 computer infrastructure, for example, may have more value in 1992 than the infrastructure as a whole, if segments of its Bill of Materials were sold individually.
- Such common parts often include, for example, memory, hard drive, monitor, floppy drive, or other components which have been traditionally maintained in a plurality of computer generations.
- Customers for these common parts may include, for example, computer service centers, parts brokers, small computer manufactures, businesses looking to upgrade their hard drives or memory, and consumers looking to fix their out-of-warranty computers.
- FIG. 2 is a pictorial diagram of a current trend 200 in capital asset flow.
- a manufacturer 202 directly sells capital equipment to a strategic-account customer 204 .
- Having a direct relationship with strategic-account and end-user customers yielded huge profitability and supply chain optimization advantages for companies.
- Manufacturers were better able to schedule production, lower manufacturing costs, and capture more business by selling directly to strategic-account and end-user customers without the added costs of a dealer/distribution network.
- Traditional high technology computer manufacturers were forced to compete with these companies in order to remain viable; and for this reason, many companies shifted to the direct model. Yet, after the useful life of the equipment, disposal remains a problem and the customer 204 usually sells the equipment for scrap 206 .
- a “trade-up” refers to a dealer's ability to capture and take ownership of existing memory chips and hard drives within a computer, while offering a single price of upgrade to a strategic-account customer.
- the reason for a trade-up is complex.
- the computer dealer may take ownership of a hard drive made by a variety of manufacturers by offering a “trade-up” service.
- the computer dealer may offer a separate service for “installation” and “data transfer” and may charge an additional amount per hard drive sold. For this reason, the computer dealer may actually end up recovering a substantial profit for each hard drive.
- Hard drive manufactures are generally unwilling to balance the cost of the old hard drive, because they do not want to tie up their available cash by taking ownership of old hard drives that they did not manufacture, or destabilize their focus by selling used drives which also hyper-depreciate (such as hard drives, ram, and microprocessors), and also because the used drives may in fact be made by a competing manufacturer. For this reason and as seen in similar industries as the microprocessor, monitor, and memory space, these commodity manufactures have never gone to a direct sales model, and therefore have not been able to optimize their manufacturing costs properly by better gauging customer demand. Moreover, they have not been able to obtain higher profit margins by selling direct.
- the present invention is a reverse logistics method and system for recapturing value of used goods over one or more internet exchange portals.
- the methods includes the following steps: offering used goods, owned by an actual seller, for sale over an internet exchange portal; selling a right to market the used goods to a virtual seller; marketing the used goods over the portal under direction of the virtual seller; identifying an actual buyer; and selling the used goods to the actual buyer.
- the present invention is contemplated as being most applicable where the used goods are subject to rapid depreciation, such as computer hardware, the virtual seller is a manufacturer of new goods, the actual seller is a strategic account customer of the manufacturer, and the manufacturer charges the strategic account customer a lower price for acquiring the new goods in exchange for marketing the used goods.
- the present invention thus gives manufactures who sell directly to their strategic accounts a more direct role in ridding their strategic account customer's of obsolete goods and thus clearing a supply chain lane for the manufacturer to sell the strategic account customer updated replacement goods.
- the virtual seller categorizes the used goods and differentiates marketing by category. Categories include condition, marketability, and functionality levels. Used goods may be virtually differentiated into a plurality of categories simultaneously marketed to obtain a maximum value for the actual seller.
- the virtual seller preferably does not take an ownership interest in the used goods which they market on behalf of the actual seller, but instead expertly directs marketing and sale of the used goods. This benefits actual sellers by allowing technology value recapture maximization without substantial investment, focus or effort.
- the present invention allows for rapid recovery of used technology assets before obsolescence affects market value, the actual seller's total cost of ownership in capital assets is reduced, thereby translating into lower fixed and variable costs of operation; which can ultimately translate into higher profitability.
- IT budgets at strategic-account customers could also significantly increase by recapturing value of previously purchased technology infrastructure.
- Virtual sellers further benefit because they are able to directly compete with computer dealers and offer value-added expert marketing services, effectively shifting virtual sellers from mere commodities merchants to a value added service providers.
- the present invention also functions as a recycling tool for minimizing waste and disposal.
- the present invention enables such goods to be reused and recycled until such goods are truly defective and/or no longer useful to anyone.
- Virtual escrow services are also provided through the present invention by inserting a delay mechanism between when the actual buyer agrees to enter into a contract with the actual seller and when the actual buyer's creditor releases payment to the actual seller.
- FIG. 1 is a pictorial diagram of a traditional model of capital asset flow
- FIG. 2 is a pictorial diagram of a current trend in capital asset flow
- FIG. 3 is a dataflow diagram of a reverse logistics method for recapturing value of used goods over one or more internet exchange portals
- FIG. 4 is a flowchart of the reverse logistics method
- FIG. 5 is a dataflow diagram of other portal services available to buyers and sellers
- FIG. 6 is a pictorial diagram of a method for dividing and aggregating the used goods
- FIG. 7 is a flowchart of a method for dividing and aggregating the used goods.
- FIG. 8 is a flowchart of a method for offering virtual escrow services to buyers for goods purchased over the portal.
- FIG. 3 is a dataflow diagram 300 of a reverse logistics method for recapturing value of used goods over one or more internet exchange portals using virtual sellers 304
- FIG. 4 is a flowchart of a method 400 for doing so. The method 300 and flowchart 400 of the present invention are discussed together.
- Reverse logistics is herein defined as a process for consummating unwanted and/or obsolete used systems, devices, components, and parts back through supply chains.
- the method begins in step 402 where an actual seller 306 and a plurality of virtual sellers and actual buyers 304 register with an internet exchange portal 302 to transact business.
- the actual seller 306 is an entity which currently owns a set of used goods which the actual seller 306 either needs to dispose of or replace with more modern goods. Actual sellers who regularly need to replace current capital assets are often labeled “strategic-account customers” by those manufacturers or other entities who sell them replacement goods.
- the virtual sellers and actual buyers 304 can, in one embodiment of the present invention, be categorized into system entities 308 , device entities 310 , component entities 312 , parts entities 314 , and scrap entities 316 .
- the system entities 308 include those who deal in whole systems, such as computer manufacturers who sell complete server and LAN systems.
- the device entities 310 include those who deal in devices within a system, such as manufacturers or dealers who sell or buy stand alone computers or printers.
- the components entities 312 include those who deal in components within devices, such as manufacturers who sell disk drives to device manufactures.
- the parts entities 314 includes those who deal in parts which make up components, such as manufacturers who sell motors to disk drive manufactures.
- the scrap entities 316 includes those who deal in scrap or defective systems, devices, components, and parts, such as those who harvest gold and other materials from PC boards, shredders, landfill exchanges.
- All of the entities discussed above may function as authorized dealers, distributors, brokers, traders, merchants, resellers, secondary market players.
- Those skilled in the art know that the above categorizations of entities are arbitrary and that many other entities can also register and participate as virtual sellers and actual buyers 304 within the method of the present invention. Some entities may only act as virtual sellers, others only as actual buyers, and yet others as both. Together, however, the entities create a substantial marketplace for marketing and bidding upon the actual seller's 306 used goods.
- the actual seller 306 offers the set of used goods for sale within an auction hosted by the portal 302 .
- the offer may specify a predetermined window in which bids for the used goods will be considered.
- the actual seller 306 accepts a bid from a first virtual seller from the set of virtual sellers 304 .
- the actual seller 306 could have accepted a bid for the used goods directly from one of the actual buyers 304 , in which case a normal contract for sale of the used goods would be entered into between the actual seller 306 and the one of the actual buyers 304 .
- a virtual seller alternatively known as a “new seller,” differs from an actual buyer in that the virtual seller does not take actual ownership of the used goods.
- step 408 the virtual seller enters into a contract with the actual seller to facilitate marketing and recapture of value for the used goods on be behalf of the actual seller 306 .
- step 410 the actual seller 306 still retains ownership of the used goods, effectively trading short term ownership burden for significantly higher recapture value recapture.
- the virtual seller takes responsibility for identifying other entities within the virtual sellers and actual buyers 304 who will either continue to facilitate marketing or take actual ownership of the used goods respectively.
- the virtual sellers and actual buyers 304 may be any single or group of the entities 308 through 316 .
- Even the portal 302 can act as a virtual seller. In this way virtual sellers facilitate large scale transactions within Business-to-Consumer (B2C) nodes, and Business-to-Business (B2B) nodes.
- such value recapture contracts not only rids the actual seller 306 of the used goods, but may help convince the actual seller 306 to upgrade to new goods offered by the virtual seller.
- Such virtual seller could even quote the actual seller 306 one discounted price for both disposing of the used goods and providing the new goods.
- such virtual seller could provide a credit to the actual seller 306 for the used goods, such as an upfront credit, a discount on invoice, or rebate.
- the first and each subsequent virtual seller may divide up and/or aggregate all or a portion of the used goods into various categories.
- virtual sellers add value to the marketing of the used goods, such that the actual seller 306 realizes a much greater market value for the used goods. Step 412 is further elaborated upon with respect to FIGS. 6 and 7 below.
- the actual seller 306 may own and wish to be rid of a used server system, however, the actual seller 306 has little if any expertise in who might be interested in buying the used system and/or how much the used system could fetch if divided up and sold piecewise.
- Virtual sellers 304 who do have such expertise, can step in and help market the used goods such that the value recaptured can be very close to full market value.
- An additional advantage of the present invention is that the actual seller 306 need not formulate a strategy for recapturing the value of the used goods.
- the virtual seller in step 414 , then offers the various categories of used goods for sale on the portal 302 .
- the virtual seller chooses which portals or exchanges to market each category of used goods on. Some goods categories may have an international market, while others only have domestic or regional markets. Studies can also be made or retrieved indicating which markets currently offer goods of lesser functionality than an average computer in a particular geographic region, after which the experts can target offers to portals servicing that region. Usually however, the used goods would be marketed over globally accessible portals in order to recapture maximum value for the actual seller 306 .
- the used goods may also be aggregated and marketed over the portal 302 to secondary dealers. Otherwise, the used goods can be marketed over B2C portals. Used goods in a totally defective condition can be marketed to the scrap entities 316 , for meltdown, resale, or remanufacture. Used good containing hazardous wastes can be posted for reverse auction bid through portal hosting various land management services.
- the actual buyers 304 survey the portal 302 and bid on the used goods.
- the present invention provides actual buyers with visibility into supply chain spot market opportunities.
- Virtual sellers can also identify actual buyers through strategic partnerships with other vertical market exchanges, other virtual portal services, or other founder dealers who are automatically migrated by aligning their existing financial flows through the portal 302 .
- the portal 302 may also have a posting and/or catalog offering, where visibility of spot market opportunities are developed through a bulletin board or catalog like representation of divided and/or aggregated used goods.
- Virtual sellers can also avail themselves of any number of “low touch” auction services which the portal 302 may provide in order to identify actual buyers for the used goods.
- a low touch auction engine is similar to that of a “classifieds” posting board in a traditional newspaper.
- An electronic version of such a “classifieds” posting system in herein being referred to as a “low touch” auction service.
- virtual sellers can dynamically adjust “reserve prices” on for various sets of used goods by linking B2B connection nodes to B2C and Consumer-to-Consumer (C2C) nodes. Actual buyers of whole systems of used goods can then effectively compete with actual buyers of devices, components and/or parts through a floating and dynamically adjusting reserve price.
- C2C Consumer-to-Consumer
- the virtual sellers can also provide support services such as customer relationship management by handling questions, problems, or concerns that actual buyers may have with a particular purchase.
- the portal 302 may also provide virtual escrow services. An example of one such escrow service is discussed with respect to FIG. 8 below.
- the portal 302 or the virtual sellers 304 can serve as financial aggregation nodes for providing financing to and collecting payments from the actual buyers 304 .
- the portal 302 can receive revenue by deducting a commission from funds paid from the actual buyer to the actual seller.
- Virtual sellers 304 who prompt or refer actual buyers 304 to the actual seller 306 may also receive a portion of the funds paid. Any sort of commission and/or incentive structure may be negotiated between the portal 302 and all of the entities depending upon each implementation of the present invention.
- Compensation can also be allotted based on estimations of value added by the portal 302 or the virtual sellers 304 who divide and/or aggregate used goods from many different actual sellers, such as when the virtual sellers hire “teams of consultants” having domain expertise in technology, industry, secondary markets, and actual buyers transacting business over the portal 302 in order to value maximize the actual seller's 306 used technology assets.
- the portal 302 may also receive revenue through value added services such as extended warranties.
- the portal 302 may also provide a set of optional services which can be integrated or it offered in parallel with the present invention.
- This suite of services preferably includes: 1) B2B Hi-Tech Asset Maximization Services, having: B2B Auctioning Strategy and Execution; Refurbishment Services; Inspection Services; Reverse Logistics Services; Market Maker Services; and Warranty Services; 2) off-Lease Services; 3) Charity Services; 4) Reverse Logistics Services, including Data Cleansing, Packaging, Transportation, Customs/International, Segmentation, and Virtual Warranty services; 5) Consignment Based Services, including: Disassembly, Subassembly management, Warehousing, and Refurbishment services; and 6) Market Pulse Services, including: B2C Market Gauge Services, Virtual Dealer Services, Inspection Services, Refurbishment Services, Inspection Services, Reverse Logistics Services, Market Maker Services, Warranty Services, Destruction Services, and Landfill shift Services. These value added services may be tailored to each portal user, industry, or used goods type.
- FIG. 5 is a dataflow diagram 500 of other portal services available to buyers and sellers who do business over the portal 302 .
- the portal 302 may also host a virtual finance services module 504 , a virtual escrow services 506 , and a virtual logistics services module 508 .
- the virtual finance services 504 available to the actual buyers 304 are discussed in part in co-pending patent application Ser. No. 09/774,449, entitled, “A SYSTEM AND METHOD FOR CONSOLIDATING FINANCING IN AN INTERNET EXCHANGE PORTAL.”
- the virtual escrow services 506 are described with reference to FIG. 8 below.
- the virtual logistics services 508 are discussed in part in co-pending patent application Ser. No. 09/785,760, entitled, “A METHOD FOR ALIGNING FINANCIAL AND LOGISTICAL FLOWS WITH AN INTERNET EXCHANGE PORTAL.”
- the portal 302 also is linked to various other portals and exchanges 510 .
- FIG. 6 is a pictorial diagram 600 of a method for dividing and aggregating the used goods
- FIG. 7 is a flowchart for doing the same.
- the diagram 600 and flowchart 700 are discussed together.
- the method begins in step 702 where the virtual seller, which the actual seller 306 has agreed to have market the used goods, selects a team of experts. The experts are preferably well versed in technology and marketing of the used goods.
- step 704 along a condition of used goods axis 612 , the used goods are divided into one of four categories: excellent/acceptable condition & marketable 602 , excellent/acceptable condition but obsolete/unmarketable 604 , mixed condition/acceptability and marketability 606 , defective/unacceptable condition & mixed marketability 608 , and defective/unacceptable condition & obsolete/unmarketable 610 .
- a value recaptured axis 614 predicts that a greater value will be recaptured for used goods in category 602 than for used goods in category 610 , with a continuum in between.
- the used goods are arbitrarily divided into various along a types/functionality-levels including systems, devices, components, parts and scrap/materials.
- used goods initially assigned to more than one category in the matrix may be aggregated together into a single matrix category.
- used goods initially assigned to only one category in the matrix may be divided up between several matrix categories. This aggregation and division can be either literal or virtual. If the aggregation and division is literal, then the used goods in each category are physically located nearby, perhaps even on a single pallet, and ready for immediate shipment.
- the used goods in each category may be physically located in several different geographic warehouse locations, even though they are being marketed over the portal 302 as a single shipment lot. Virtually aggregated and divided goods may be shipped directly to the actual buyer from each of the several different warehouses.
- the virtual seller significantly increases the marketability of the used goods by simultaneously offering the used goods in several different matrix categories without literally having to physically aggregate or divide the offered goods.
- the experts may receive used systems and used components from the actual seller 306 .
- the used systems may fall into the mixed condition and marketability category 606 and the used components may fall into the excellent condition & marketable category 602 .
- the expert may then identify which of the used systems in the mixed condition and marketability category 606 are in excellent condition & marketable, are in excellent condition but obsolete, are in defective conditions and have mixed marketability, and are in defective condition and obsolete.
- the experts could then reallocate the used systems to those respective categories 602 , 604 , 608 , and 610 .
- auction services 616 of the portal 302 may be used for all categories, refurbishment services 618 and virtual warranties 620 are preferably limited to certain categories of used goods.
- step 712 after the used goods are sold to an actual buyer and the virtual seller physically divides and/or aggregated the used goods as appropriate to conform to the actual buyer's purchase order.
- FIG. 8 is a flowchart 800 of a method for offering virtual escrow services to the actual buyers 304 for goods purchased over the portal 302 .
- the flowchart 800 is discussed in conjunction with the diagram 500 of FIG. 5 .
- Uniform Commercial Code (UCC) laws give the actual seller 306 a right to exclude any actual or implied warranties of fitness through contract language such as: “as is,” “with all faults,” or any other similar language; however, such exclusions tend not to appear in internet auctions, since such offers are often ignored by the actual buyers 304 . Even when actual or implied warranties of fitness are not excluded, there often remains a certain lack of trust between an actual buyer and the actual seller 306 .
- Escrow services can be provided throughout each of four steps relevant to auction transactions. These steps are agreement, payment, delivery, and inspection.
- the agreement step is defined as when the actual buyer and actual seller negotiate terms and information for a purchase contract. Both must accept the terms of the agreement for a sale to proceed.
- the actual buyer submits payment to a trusted intermediary.
- the trusted intermediary secures the payment in a trust account, after which the actual seller is notified that the actual buyer's payment is securely held in escrow.
- the actual seller delivers the used goods to the actual buyer.
- the actual buyer decides to accept or reject the used goods within an inspection period agreed to by both parties. If the buyer accepts the goods, the trusted intermediary releases the funds to the seller. If the buyer is unhappy with the goods, payment is returned to the buyer after the seller inspects and accepts the returned merchandise.
- Escrow service providers are particularly useful when buyers and sellers wish to remain anonymous, or when there is a clear lack of trust between a buyer and seller, or when refurbished, Defective-On-Arrival (DOA), End-of-Life (EOL), spot market, reverse auction raw materials/components, or various other products are bought and sold.
- Escrow service providers basically help to minimize risk of fraud, misrepresentation, and misappropriation, which can arise from internet auction transactions over the portal 302 .
- escrow service provider is Escrow.com located in Santa Ana, Calif.
- the virtual escrow method begins in step 802 where the actual buyer obtains a flooring credit line from a financial provider identified by the virtual financial services module 504 (see FIG. 5 ).
- the actual seller and the actual buyer agree to deliver and pay for the used goods respectively.
- the virtual financial services module 504 does not immediately release payment on behalf of the actual buyer to the actual seller. Instead, in step 806 , the virtual financial services module 504 delays payment by transferring payment funds to the virtual escrow services module 506 .
- the actual seller uses the virtual logistics services module 508 to deliver the used goods to a neutral location maintained by the virtual escrow services module 506 for the purposes of letting the actual buyer inspect the used goods.
- the virtual escrow services module 506 releases payment to the actual seller in step 810 and the virtual escrow services module 506 instructs the virtual logistics services module 508 to deliver the used goods to the actual buyer. Otherwise, the virtual escrow services module 506 returns the funds to the financial provider and the used goods to the actual seller, in step 812 .
- conventional financial and logistical services can be used in conjunction with the virtual escrow services module 506 .
- a huge indirect benefit of the present invention is in a total cost of manufacturing products.
- the total cost of manufacturing hi-tech products will drop dramatically, by allowing a mechanism whereby to sell through “pre-purchased manufacturing equipment” through an internet portal.
- Applied Materials sells Hewlett Packard company the new Robo4000 robot for $50 million dollars, capable of manufacturing 4000 LaserJet motherboards in an hour in 1994.
- Hitachi Automation Group comes out with the SuperDuper5000, a hi-speed robot, capable of manufacturing 10,000 LaserJet motherboards in 1 hour for $45 million.
- Hitachi Automation wants to sell the new SuperDuper5000 to Hewlett Packard, and Hewlett Packard wants to buy it, however Hewlett Packard has no idea what to do with the old Applied Materials Robo400 it just bought a year previously for $50 million. In the current system, often times Hewlett Packard makes a cost trade off decision, and either decides to not buy the SuperDuper5000, or buy it and sell the Robo4000 for scrap for $5 million dollars.
- Hitachi Automation knows that Beijing Industries and a few other companies have a need for something like the Robo4000, and better understands the bill of materials optimization strategies than does the portal.
- a Supply Chain Director at Beijing Industries inquired to Hitachi Industries earlier in they year whether Hitachi Industries had a solution that could manufacturer 4000 motherboards an hour for around $20 million.
- Hitachi Industries previously had said no they don't have a new solution that fits that customer need, but had kept that information in a knowledge database.
- Hitachi knows that by parting out the Robo4000, the parts could potentially draw higher returns than selling the whole Robo4000, since the Robo4000's parts are similar but different to the Hitachi SuperDuper5000.
- such domain information from Hitachi might help to add insight as to the strategy needed to best asset maximize the Robo4000, and will potentially help increase split commission structures flowing back to Hitachi.
- Hitachi Industries were to receive 2% for serving as a CRM (customer relationship management) and reverse logistics optimization consultant node, a sale of the Robo4000 from HP to Beijing Industries would translate into a $400,000 pure revenue opportunity for Hitachi, which might flow directly into the company's profitability, since it would be a “pure revenue stream”.
- “Pure revenue stream” is a term of art in the high tech industry in which there are no costs of associated manufacture or warranty. Because the ownership will be transferred directly from HP to Beijing Industries, warranty representations if any would be the responsibility of HP! HP might decide to sell the Robo4000 as is, or might decide to offer a 20-day warranty. Additionally, HP might negotiate with the “Virtual Escrow and Trade In services” to shift the warranty burden to “HP Virtual Escrow and Trade In services” in exchange for a higher commission rate (e.g. “HP Virtual Escrow and Trade In services” might keep 15% rather than 10% of recovery value and offer a 1 year extended warranty).
- Free markets and other vertical exchanges may not have the larger and expanded target bidder community that can be had through the present invention because of the added referrals from Hitachi.
- Hitachi Automation would probably not want to take ownership of the Robo4000 because it is made by another manufacturer, and would potentially confuse its distribution strategy and destabilize the company. Furthermore, because of the limited number of customers for such manufacturing equipment, Hitachi Automation would have previously probably had to assume ownership interest in the old Robo4000. Inventory carrying costs for such equipment is very high, since such equipment requires frequent maintenance and rapidly devalues. Furthermore, Hitachi would have no guarantee of making money from buying up the Robo4000.
- the present invention allows Hitachi to better leverage its core competency as a “expert” in the intermediary manufacturing equipment world by offering a “consulting” service, without every taking ownership of the Robo4000! Furthermore, Hitachi's ability to help “HP Virtual Escrow and Trade In services” in finding best value recapture strategy and in building a larger bidder pool at the internet portal in the “connection” of finding the best place for the Robo4000 would allow it to make money without ever taking ownership of the Robo4000! This could dramatically create huge new profitability opportunities for Hitachi.
- a “high tech asset” consisted of three components, a microprocessor (A), an LCD screen (B), hard drive (C), and everything else (D).
- A a microprocessor
- B LCD screen
- C hard drive
- D everything else
- the values of these components are respectively A, B, C and D.
- X is the value of the whole system containing the microprocessor, LCD screen, hard drive, and everything else.
- a low touch auction engine is generally utilized by consumers rather than businesses. For this reason, a potential low touch buyer would have interest primarily in X rather than A, B, C, D individually. However, a business in the market of parts may have use for A, B, C, or D or any combination of these components.
- A+B+C +D X (the parts A,B,C,D make up the whole which is X).
- the value of A, B, C, D might actually be much more than X. e.g. A might be worth $70, B might be worth $40, C might be worth $25 and D might be worth $15. However, X might be only worth $90 as a whole unit.
- the present invention can dynamically increase and decrease a potential “reserve price” for System X made specifically clear in the terms of contract within the scope of the low touch auction engine and its consumer users.
- individual and/or networked groups of exchange portals implementing the present invention can be benefit transactions in a variety of products and within a variety of industries, including: microprocessors, medical equipment, manufacturing equipment, telecommunications, defense, general and contract manufacturing, semiconductor, raw material, subcomponent manufacturing, retail and government distribution, pharmaceutical, automotive, software, aerospace, industrial equipment, Application Service Provider, agricultural, food services, retail and commercial land sell/leasing/rental property, financial services, banking, furniture, oil/gas/energy, consulting, legal services, medical services, office equipment and computer hardware.
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US09/809,543 US6915274B2 (en) | 2001-03-14 | 2001-03-14 | Reverse logistics method for recapturing value of used goods over internet exchange portals |
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